Similar presentations

2 Objectives/AssignmentHow to distinguish between discrete random variables and continuous random variablesHow to construct a discrete probability distribution and its graphHow to determine if a distribution is a probability distributionHow to find the mean, variance, and standard deviation of a discrete probability distributionHow to find the expected value of a probability distributionAssignment pp #1-30 all

3 Random VariablesThe outcome of a probability experiment is often a count or a measure. When this occurs, the outcome is called a random variable.A random variable, x, represents a numerical value assigned to an outcome of a probability experiment.There are two types: discrete and continuous

4 Discrete v. continuousA random variable is discrete if it has a finite or countable number of possible outcomes that can be listed.A random variable is continuous if it has an infinite number of possible outcomes represented by an interval on the number line.

5 So . . .Suppose you conduct an experiment of the number of calls a salesperson makes in one day. The possible values of the random variable are 0, 1, 2, 3, 4, and so on. Because the set of possible outcomes {0, 1, 2, } can be listed, x is a discrete random variable. You can represent its values as points on a number line.. . .x can only have whole number values 0, 1, 2,

6 So . . .A different way to conduct the study would be to measure the time (in hours) a salesperson spends making calls in one day. Because the time spent making sales calls can be any number from 0 to 24 (including fractions and decimals), x is a continuous random variable. You can represent its values with an interval on a number line, but you cannot list all the possible values.x can have any value between 0 and 24

7 Ex. 1: Discrete variables and continuous variables.Decide whether the random variable, x, is discrete or continuous. Explain your reasoning.1. x represents the number of stocks in the Dow Jones Industrial Average that have share price increases on a given day.The number of stocks whose share value increases can be counted {0, 1, 2, }. So x is a discrete random variable.

8 Ex. 1: Discrete variables and continuous variables.Decide whether the random variable, x, is discrete or continuous. Explain your reasoning.2. x represents the volume of bottled water in a 32-ounce container.The amount of water in the container can be any volume between 0 and 32, so x is a continuous random variable.

9 Note:It is important that you can distinguish between discrete and continuous variables because different statistical techniques are used to analyze each. The remainder of this chapter focuses on discrete random variables and their probability distributions. You will study continuous distributions later.

10 Discrete Probability DistributionsEach value of a discrete random variable can be assigned a probability. By listing each value of the random variable with its corresponding probability, you are forming a probability distribution.1. The probability of each value of the discrete random variable is between 0 and 1 inclusive. That is,0  P(x)  12. The sum of all the probabilities is 1. That is,P(x) = 1

12 Guidelines of Constructing a Discrete Probability DistributionLet x be a discrete random variable with possible outcomes x1, x2, xn.Make a frequency distribution for the possible outcomes.Find the sum of the frequencies.Find the probability of each possible outcome by dividing the frequency by the sum of the frequencies.Check that each probability is between 0 and 1 and that the sum is 1.

13 Ex. 2: Constructing a Discrete Probability DistributionAn industrial psychologist has administered a personality inventory test for passive-aggressive traits to 150 employees. Individuals were rated on a score from 1 to 5 where 1 was extremely passive and 5 extremely aggressive. A score of 3 indicated neither trait. The results are shown on the next slide. Construct a probability distribution for the random variable, x. Then graph the distribution.

15 x12345P(x)0.160.220.280.20.14The discrete probability distribution is shown in the following table. Note that each probability is between 0 and 1 and the sum of the probabilities is 1.The relative frequency distribution is also shown at the right. The area of each bar represents the probability of a particular outcome.

16 Ex. 3: Verifying Probability DistributionsVerify that the distribution is a probability distribution.Days of RainProbability0.21610.43220.28830.064Solution: If the distribution is a probability distribution, the (1) each of probability is between 0 and 1, inclusive and (2) the sum of the probabilities equals 1.

17 Ex. 3: Verifying Probability Distributions1. Each probability is between 0 and 1.Days of RainProbability0.21610.43220.28830.0642. P(x) = = 1Because both conditions are met, the distribution is a probability distribution.

18 Ex. 4: Probability DistributionsDecide whether each distribution is a probability distribution.x5678P(x)0.280.210.430.15Each probability is between 0 and 1.However, the sum of the probabilities is 1.07, which is greater than 1. So, it is NOT a probability distribution.

19 Ex. 4: Probability DistributionsDecide whether each distribution is a probability distribution.x1234P(x)5/4-1The sum of the probabilities is equal to 1.However, P(3) and P(4) are not between 0 and 1. So, it is NOT a probability distribution.

20 Mean, Variance and Standard DeviationYou can measure the central tendency of a probability distribution with its mean, and measure the variability with its variance and standard deviation.The mean of a discrete random variable is given by: = xP(x).Each value of x is multiplied by its corresponding probability and the products are added.

21 Note:The mean of the random variable represents the “theoretical average” of a probability experiment and sometimes is not a possible outcome. If the experiment were performed thousands of times, the mean of all the outcomes would be close to the mean of the random variable.

22 Ex. 5: Finding the Mean of a Probability DistributionThe probability distribution for the personality inventory test for passive-aggressive traits discussed in Ex. 2 is given at the right. Find the mean score. What can you conclude?xP(x)10.1620.2230.2840.2050.14

23 Organize your tables carefully.xP(x)xP(x)10.161(0.16) = 0.1620.222(0.22) = 0.4430.283(0.28) = 0.8440.204(0.20) = 0.8050.145(0.14) = 0.70P(x) = 1xP(x) = 2.94Use the table to organize your work as shown at the left. From the table, you can see that the mean is A score of 3 represents an individual who is neither extremely passive nor aggressive, but is slightly closer to passive.MEAN

24 Note:While the mean of the random variable of a probability distribution describes a typical outcome, it gives no information about how the outcomes vary. To study the variation of the outcomes, you can use the variance and standard deviation of the random variable of a probability distribution.

26 Ex. 6: Finding the variance and Standard DeviationThe probability distribution for the personality inventory test for passive-aggressive traits discussed in Ex. 2 is given at the right. Find the variance and standard deviation of the probability distribution.xP(x)10.1620.2230.2840.2050.14

30 Ex. 7: Finding an Expected ValueAt a raffle, 1500 tickets are sold at $2 each for four prizes of $500, $250, $150 and $75. You buy one ticket. What is the expected value of your gain?Note: Expected value plays a role in decision theory. Although probability can never be negative, the expected value can be negative.

31 SOLUTION: To find the gain for each prize, subtract the price of the ticket from the prize. For instance, your gain for the $500 prize is $500 - $2 = $498. Then write a probability distribution for the possible gains (or outcomes).Gain, x$498$248$148$73- $2Probability, P(x)1/15001496/1500

32 Then, using the probability distribution, you can find the expected value. E(x) = xP(x)Because the expected value is negative, you can expect to lose an average of $1.35 for each ticket you buy.